The recent hog crisis has led to calls at Ontario hog producer meetings this summer to consider a supply management system.
As in the dairy, poultry and egg sectors, supply management would limit supply, control imports and set prices at profitable levels. The industry would produce for a protected domestic market.
A report prepared for Ontario Pork and published last week said the industry should not be surprised that some producers are wondering if there is a better way to structure their marketing and production systems.
Read Also
Carberry field day looks for agriculture solutions
Manitoba farmers explored research solutions for resilient crops, perpetual agronomic issues and new kinds of agricultural products at a field day at the Manitoba Crop Diversification Centre in Carberry on Aug. 6.
“In particular, producers are interested in learning more about supply management and what some of the advantages and disadvantages of this marketing option are,” said the report by University of Guelph analysts working at the Ridgetown campus.
In the end, they concluded that supply management would not be a good option and probably could not be implemented even if it was.
The reasons are domestic, international and practical, the study said.
The hog industry has become highly dependent on the export market. In 2008, almost 63 percent of production was exported live or as pork.
A supply management system would end those exports.
“There would have to be considerable downsizing if production was to meet only Canadian demand and there was no international trade,” the report said.
It suggested a 62.7 percent industry contraction would be necessary if exports ended.
The Canadian Pork Council is conceding that the industry will contract in any event and exports will fall, but not as severely as if supply management was implemented.
In its survival plan presented to federal and provincial governments this summer, the council said Canada’s hog herd likely will decline 18 percent to 25.5 million head by 2014. Exports of live pigs to the United States will fall 60 percent to four million, sales into the Canadian market will increase 150,000 tonnes to 730,000 tonnes and total pork exports will decrease to one million tonnes. Only 20 percent of that would go to the U.S.
Meanwhile, the Ridgetown study said domestic consumption, which a supply managed system would aim to fill, has been falling in recent years, down 22 percent on average per capita between 1999 and 2008.
Division of quota in Canada would be complicated and politically volatile because Manitoba produces 33 percent of Canadian hogs, but it has four percent of the national population, which often is the basis of provincial quota distribution.
In addition, the study said a sharp reduction in the number of hogs produced to ensure producer profitability would jeopardize much of the processing base because supply could be too small to maintain production at all existing plants.
“Within Canada, there are several processing plants that specialize in exporting to foreign markets, for example, the Maple Leaf plant located in Lethbridge,” it said.
“Also, there are value-added further processing plants that market considerable volumes of pork product that would have to alter their business plans or shut down.”
It also noted that some pig parts not typically consumed in Canada are exported, and the end of those exports could undermine processor profitability.
The analysts also questioned whether Canada could legally implement a new supply management scheme.
Trade deals Canada has signed, including the North American Free Trade Agreement and the World Trade Organization pact, prohibit new import barriers.
“The ability to control imports is an important component and would be difficult to achieve through the use of trade barriers since current international trade agreements have the goal of lowering barriers over time,” the report said.
